VMware today unveiled its first public infrastructure-as-a-service (IaaS) cloud product, putting the virtualization software vendor into direct competition with Amazon Web Services. When combined with its in-house software, VMware's cloud also provides an alternative to the virtualization/cloud synergy Microsoft is trying to achieve with Hyper-V, Windows Server, and Windows Azure.

Like Amazon and other IaaS providers, VMware's public cloud will offer access to virtual computing resources hosted in data centers in four US regions (with non-US data centers coming next year). VMware's biggest opportunity probably isn't in stealing customers away from Amazon or Microsoft, however. Rather, the VMware cloud will likely appeal the most to businesses with big VMware deployments—this is a strategy to wring more money out of customers already paying a premium for virtualization software.

VMware's cloud could be used by customers without any VMware software in-house, but it will be more useful to businesses that can use the cloud as a logical extension of their own VMware-driven data centers. The VMware cloud's name, "vCloud Hybrid Service," reflects the customer base it will most likely attract.

VMware's US-based services will be available to early access customers in June and will be generally available in the third quarter of this year from data centers in Santa Clara, CA; Dallas, TX; Las Vegas, NV; and Sterling, VA. Services will be offered from data centers in Asia and the EMEA (Europe, Middle East, and Africa) sometime in 2014. Customers outside the US aren't prohibited from using the US-based services, but they would have to handle some latency.

Compute capacity will be offered in two varieties, one on dedicated hardware and another on shared hardware. Minimum configurations for multi-tenant instances (called a "Virtual Private Cloud") are 20GB of virtual RAM, 5GHz CPU power (with a "burst" to 10GHz), 2TB of storage, 10Mbps bandwidth, and two public IP addresses. Customers can manage this capacity from a Web interface using management tools similar to what's found in VMware's on-premises software. Pricing for customers who sign contracts of three to 12 months is as follows:

The pricing does not include the cost of operating system licenses and looks to be less flexible than Amazon's, but that's likely not a problem when it comes to attracting users already locked in to VMware's vSphere virtualization and data center management platform. By using vSphere in combination with vCloud Hybrid Service, customers will be able to spin up new applications in the cloud using vSphere, or they can add capacity to applications without buying more hardware for their own data centers. Applications can draw from resources both in a customer's data center and in a VMware data center and appear to be on the same network.

On its own, VMware's vCloud Hybrid Service is more analogous to Amazon's cloud than Microsoft's because it offers pure infrastructure rather than a platform optimized for developers to build and host new applications. Windows Azure began as a platform-as-a-service (PaaS) cloud only, just recently expanding to include infrastructure-as-a-service.

"You don't actually have to buy vSphere unless you were going to deploy an on-premises environment. You could just buy the off-premises vCloud Hybrid Service," VMware Director of Partner Strategy Mercer Rowe told Ars. However, the real value is derived by combining on-premises and cloud-based deployments and managing them from the same interface, he said. That's similar to how Microsoft's on-premises software can be used in conjunction with Azure.

"You can stretch your Layer 2 and Layer 3 networks seamlessly from your data center to vCloud Hybrid Service without the need for manual configuration changes," a VMware product sheet states. "Network virtualization enables you to configure your firewalls and network as if they were in your own data center so that you can replicate the network your applications need to operate. The service provides common identity and access management across your onsite and offsite cloud locations."

VMware said there are 3,700 applications certified to run on vSphere and vCloud Hybrid Service. vCloud Hybrid Service can run any of the "more than 90 operating systems" already certified to run on vSphere.

Rather than sell virtual machines preloaded with operating system images, VMware "sells pools of compute resources (RAM and CPU) to the customer and allows them to create VMs based on their needs," a company spokesperson told Ars. Customers can use their own OS images or use templates from VMware's catalog, which includes Windows and Linux configurations. "VMware will be reselling OS and application licensing for VMs generated out of the global VMware catalog where needed," the company said.

In other words, the prices can't be easily compared to Amazon's, which sells VMs preloaded with operating systems and includes the licensing cost in the advertised price.

VMware said it is also teaming with SAP to offer hosted versions of the company's enterprise applications, including the HANA database.

VMware’s other competition—its own partners

While this is the first IaaS cloud offered by VMware directly to customers, it's not the first cloud service based on VMware software. VMware has been selling cloud infrastructure software to service providers for several years, meaning the vCloud Hybrid Service is potentially a competitor to VMware's own partners such as AT&T and Verizon's Terremark.

VMware is trying to soften the blow by working with partners to help them offer add-on services for vCloud Hybrid Service, such as consulting and management. VMware will also make the underlying vCloud Hybrid Service technology available to providers so they can build new cloud services of their own, perhaps targeted to specific industries or geographic regions. VMware partners also offer network and colocation services that might differ from VMware-branded-services, Rowe said.

VMware also has a hosted platform-as-a-service cloud called Cloud Foundry, which is mostly for creating new applications rather than putting existing ones in the cloud. VMware and its owner, EMC, recently spun out Cloud Foundry and several other cloud and big data business units into a new subsidiary called "Pivotal."

VMware has plenty of cloudy competition in addition to Amazon and Microsoft. Besides longstanding IaaS vendors like Rackspace and GoGrid, Google offers App Engine and Compute Engine to cover both the PaaS and IaaS markets.

Editor's note: The pricing charts in this story, republished from VMware's website, were incorrect when first published. VMware has since fixed its pricing charts, and we've updated this article with the correct ones.

. I use both Amazon and Azure and I can't see how this is cloud when you have 12 month commitments and things are priced by the GB/hr? I spin up VMs for an hour or two all the time.... if I can't easily throw things back into the pool, it's technically not a cloud. And 50mbits? I get about 200mbit(TCP) per processor with the other guys, on a 10 gigabit connect.

. I use both Amazon and Azure and I can't see how this is cloud when you have 12 month commitments and things are priced by the GB/hr? I spin up VMs for an hour or two all the time.... if I can't easily throw things back into the pool, it's technically not a cloud. And 50mbits? I get about 200mbit(TCP) per processor with the other guys, on a 10 gigabit connect.

While Amazon probably pitches what VMware is promoting here, hybrid cloud isn't being pitched to people like you. This is largely (I'm sure not exclusively) intended for people already running an on-premise cloud, and they need scale-out services on-demand. The 12-month commitment is probably subscription to the infrastructure (I haven't read it, so could be completely off). Having that infrastructure sitting around does incur significant overhead, and if it's not designed for people running a couple of VMs for a couple of hours then their market base shrinks significantly with the per-unit cost rising.

So what Amazon offers in general, and what VMware is offering, are really two different beasts. I'm sure VMware will try to appeal to smaller companies with smaller requirements, but by and large they're probably looking for beefy companies with the budgets to pay for it.

. I use both Amazon and Azure and I can't see how this is cloud when you have 12 month commitments and things are priced by the GB/hr? I spin up VMs for an hour or two all the time.... if I can't easily throw things back into the pool, it's technically not a cloud. And 50mbits? I get about 200mbit(TCP) per processor with the other guys, on a 10 gigabit connect.

Can someone help me understand what I am missing here. It appears that if I were to use the 2 terrabytes of storage for a month it would cost me over $200,000 for one month .14*2000gb*24hrs*30days. Which seems extremely high.

Can someone help me understand what I am missing here. It appears that if I were to use the 2 terrabytes of storage for a month it would cost me over $200,000 for one month .14*2000gb*24hrs*30days. Which seems extremely high.

Yeah, that's obvious nonsense.

A lot of their pricing doesn't make any sense. I think the charts were put together by marketroids that don't understand the significance of units.

For example, the bandwidth pricing is in $/GB/hr, which is pretty bizarre. And all of the pricing is per unit of time except IPs.

"VMware's biggest opportunity probably isn't in stealing customers away from Amazon or Microsoft, however. Rather, the VMware cloud will likely appeal the most to businesses with big VMware deployments—this is a strategy to wring more money out of customers already paying a premium for virtualization software."

Business strategies predicated on wringing money out of a captive audience only works in the long term if the audience is REALLY captive, as in permanently legally trapped (e.g. taxes). If you try it when the audience has some potential way out, you are guaranteed long-term failure.

VMware's whole business approach seems to be to try to disprove this inescapable truth. How's that been working out for you, VMware? Go ahead, don't learn from your recent experiences with what happens when you try to ream your customers. The rest of us, who DID learn from that experience vicariously, won't really care, because the lesson WE learned is: don't use VMware.

What's with the undertone of VMware hate? Would be nice to have the reporting a bit more objective. And if you are going to make it an editorial, just be open with and go right at 'em.

Even the promoted comment is the same...

Man, but when I write anything even slightly positive someone accuses me of writing a press release instead of doing journalism. I just call it like I see it whether positive or negative, not everyone's gonna be happy with everything we write. I think the VMware offering is pretty interesting, but if it faces obvious challenges or competition I think that needs to be stated.

Man, but when I write anything even slightly positive someone accuses me of writing a press release instead of doing journalism. I just call it like I see it whether positive or negative, not everyone's gonna be happy with everything we write. I think the VMware offering is pretty interesting, but if it faces obvious challenges or competition I think that needs to be stated.

Hybrid cloud is definitely interesting. On-premise cloud with the option of scale-out on someone else's infrastructure? It's not only compelling, it may end up saving a company in a time when "service unavailable" is far less tolerated than just five years ago.

As you say, however, VMware has significant public relations issues around cost and licensing. The editors-pick comment is part of the zeitgeist. Hopefully they can fix it, and become more competitive on those fronts, but this is their current reality.

. I use both Amazon and Azure and I can't see how this is cloud when you have 12 month commitments and things are priced by the GB/hr? I spin up VMs for an hour or two all the time.... if I can't easily throw things back into the pool, it's technically not a cloud. And 50mbits? I get about 200mbit(TCP) per processor with the other guys, on a 10 gigabit connect.

While Amazon probably pitches what VMware is promoting here, hybrid cloud isn't being pitched to people like you. This is largely (I'm sure not exclusively) intended for people already running an on-premise cloud, and they need scale-out services on-demand. The 12-month commitment is probably subscription to the infrastructure (I haven't read it, so could be completely off). Having that infrastructure sitting around does incur significant overhead, and if it's not designed for people running a couple of VMs for a couple of hours then their market base shrinks significantly with the per-unit cost rising.

So what Amazon offers in general, and what VMware is offering, are really two different beasts. I'm sure VMware will try to appeal to smaller companies with smaller requirements, but by and large they're probably looking for beefy companies with the budgets to pay for it.

Can someone help me understand what I am missing here. It appears that if I were to use the 2 terrabytes of storage for a month it would cost me over $200,000 for one month .14*2000gb*24hrs*30days. Which seems extremely high.

It seems insane. Unless I'm missing something too, storage is actually four times the price per GB than RAM on the monthly plan. That just can't be right.

It would actually be much cheaper to provision a 10GB RAM disk than to provision 10GB of storage. I can't think of any sane situation where that would reflect the cost of actually delivering the service.

What's with the undertone of VMware hate? Would be nice to have the reporting a bit more objective. And if you are going to make it an editorial, just be open with and go right at 'em.

Even the promoted comment is the same...

Man, but when I write anything even slightly positive someone accuses me of writing a press release instead of doing journalism. I just call it like I see it whether positive or negative, not everyone's gonna be happy with everything we write. I think the VMware offering is pretty interesting, but if it faces obvious challenges or competition I think that needs to be stated.

You make the mistake of assuming they're arguing in good faith.

"You should be more objective" is really a high-minded sounding way of saying, "I don't like your point of view, so shut up."

Rather than sell virtual machines preloaded with operating system images, VMware "sells pools of compute resources (RAM and CPU) to the customer and allows them to create VMs based on their needs," a company spokesperson told Ars.

That's interesting - and answers someones question of what a 30GHz vCPU looks like. You can run umpteen VMs in a single "instance", unlike other vendors. I think that's nice, as I would often have to look at larger instances for a single resource, which leaves me with a huge excess of another resource.

Still not sure how much I'd use it, but if it's cheaper than buying another R910 for a short-lived need, we'll probably end up using it eventually.

It appears to be against the vCloud acceptable use policy to "access or use the Service Offering in a way intended to avoid recurring fees or exceeding usage limits."

Aren't they saying that actions typically associated with cloud computing, like adjusting resource usage to meet demand in order not to pay for what you're not using, violate their AUP?

They probably mean that you shouldn't hack their buggy system to get more than you're paying for. It's possible that their provisioning and billing are not tightly integrated so that if you've paid for, say, N VMs it will still let you start more than N VMs (loose or no quota enforcement is pretty common in enterprise chargeback).

Can someone help me understand what I am missing here. It appears that if I were to use the 2 terrabytes of storage for a month it would cost me over $200,000 for one month .14*2000gb*24hrs*30days. Which seems extremely high.

It turns out VMware published incorrect pricing charts. I've just updated the charts in this story to the correct versions. The storage was listed as "GB/hr" when it is actually "GB/month."

. I use both Amazon and Azure and I can't see how this is cloud when you have 12 month commitments and things are priced by the GB/hr? I spin up VMs for an hour or two all the time.... if I can't easily throw things back into the pool, it's technically not a cloud. And 50mbits? I get about 200mbit(TCP) per processor with the other guys, on a 10 gigabit connect.

The picture makes A LOT of sense

"Cloud" is a marketing term, not a technical term. They can define it however they want.

What's with the undertone of VMware hate? Would be nice to have the reporting a bit more objective. And if you are going to make it an editorial, just be open with and go right at 'em.

Even the promoted comment is the same...

Man, but when I write anything even slightly positive someone accuses me of writing a press release instead of doing journalism. I just call it like I see it whether positive or negative, not everyone's gonna be happy with everything we write. I think the VMware offering is pretty interesting, but if it faces obvious challenges or competition I think that needs to be stated.

You make the mistake of assuming they're arguing in good faith.

"You should be more objective" is really a high-minded sounding way of saying, "I don't like your point of view, so shut up."

No, objective means you present both side of the issue. And per the author's response he seems to grasp the issue but fails to see the solution. He says he can't write something one way or the other without hearing from someone... well that's because your supposed to present both sides or at least curb your bias in REPORTING. When writing an editorial let your bias fly and don't feel you have to give equal treatment.

Love Ars and been here a long time. But the personal views are really mixing too much with the content as of late.